Britain came ninth on a list of 43 developed countries and edged out other European nations after being ranked 15th last year, according to the Mercer CFA Institute’s annual world pensions index. The report examined the security and sustainability of public and private retirement income, as well as whether or not they provide people with a living.
However, Britain ranked among the worst countries in terms of the gender pension gap, falling into the bottom four. On average, men’s pensions were 41 percent higher than those of women, with only Japan, Mexico and Austria performing worse.
The report also criticized the UK’s approach to retirement savings, saying Britons need to borrow less and employers need to pay more for people’s pensions if the UK is to rank even higher. that ninth in the future.
Currently, employers and workers are only required to pay a minimum of eight percent of their wages each year.
Germany, France and Spain all ranked below the UK in 2021, finishing 14th, 21st and 24th respectively. The report found that Germany must increase basic benefits for retirees in order to rank higher.
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France, on the other hand, has not performed well due to the fact that its retirement age is too low, which means that there are not enough older people working and contributing, which makes the French retirement system unsustainable.
The pension systems in Iceland, the Netherlands and Denmark were the only ones to achieve an âAâ rating, which the report describes as a nation with âa strong and first-rate retirement income system. class that offers good performance, is durable and has a high level of integrity â.
In Iceland, the best-performing country in retirement, it is believed that many people work until old age, which contributes to the overall ranking of the country.
Israel, Norway and Australia were awarded B + ratings, which ranked fourth, fifth and sixth respectively in the overall standings.
Countries receiving a B rating included the United Kingdom, as well as Finland, Sweden, Singapore, Switzerland, Canada, Ireland, Germany, New Zealand and Chile.
On the other hand, Thailand ranked as the worst country to retire, with a low score on adequacy. Thailand and Argentina were the lowest ranked pension systems, each scoring a D rating.
Italy was the poorest country in terms of sustainability, which determines whether current pension payments can be sustained over time.
The authors of the report indicated that providing financial security in retirement is essential for both individuals and societies, as they say most countries are now “grappling with the social, economic and financial impacts. the aging of the population â.
They said many of these issues were highlighted by the COVID-19 pandemic, but also said there were other issues that have strained pension systems across the world. .
The authors pointed out that “the current economic environment with reduced wage growth, historically low interest rates and reduced returns on investment in many asset classes” as factors putting additional financial pressures on the systems of employment. retirement income.
One of the problems highlighted by the study was the gap between men’s and women’s pensions. It has been found that in all systems around the world higher retirement income is provided to men than to women.
Women’s pensions are often suspended for a variety of reasons, such as taking time off work to care for young children or an elderly parent. This can set women back several years, which means they often lack tax breaks as well as employer contributions. The interruption of a career has also had an impact on the long-term progression of women in the workplace, leading to lower wages later in their careers.
To help close the gap, the study called on policymakers to provide affordable and quality childcare services that can encourage women to return to the workforce earlier, and to ensure that pension rights accrued during a marriage or civil partnership are taken into account in the event of divorce. or separation.
A DWP spokesperson said: âOur groundbreaking pension reforms, including automatic enrollment, have helped millions more women save for retirement, many for the first time. The participation in pensions of eligible women working in the private sector increased from 40% in 2012 to 86% in 2019.
“It is not possible to make realistic comparisons at the international level between state pension levels due to differences between countries such as tax and health systems, access to occupational pensions and the availability of pensions. ‘other social benefits. “